Tuesday 02/11/14

The on-again, off-again Affordable Care Act triggered again this week, as the Obama Administration issued 227 pages of final regulations defining which "large" employers must ultimately offer employee health insurance coverage and when.

Under the newest rules, employers will have responsibility to offer ACA-compliant health insurance policies only if they employ 100 or more full-time employees starting in 2015; those with 50 or more full-time employees now will have until 2016 to comply. Originally, all employers with more than 50 full-time equivalents needed to offer suitable insurance in 2014 or they would face fines.

While small business welcomes the extra breathing room, farmers shouldn't be under the false impression that they have nearly two years before ACA affects them, cautioned Frank Gasperini, executive vice president of the National Council of Agricultural Employers.

As DTN reported last month, small employers with under 50 employees are not required to offer insurance, but they could still be subject to sizable fines in 2014 if they are reimbursing employees for individual health insurance premiums in pre-tax dollars ( see "Big Penalities Disrupt Small Business Benefits" on DTN's Farm Business page). That conclusion was based on armies of accountants and attorneys who studied another massive and complex IRS guidance issued last September.

This week's regulations remind employers to assess their employee headcounts carefully in 2014, since that will sets the base for 2015 compliance, Gasperini said. " All employers will need good payroll records with wage and hour data that is trackable in the event of an IRS audit."

IRS defines full-time employees as anyone who works more than 30 hours per week. Generally, seasonal employees will not be considered full-time if they work fewer than six months each calendar year. That means H-2A guest workers who come for up to 10-month stints will count as full-timers under the final rules, Gasperini said.

H-2A workers already must comply with the individual insurance mandate in 2014, just as other U.S. citizens and legal immigrants. Guest workers who fail to purchase insurance and who fail to file tax returns in the U.S. are likely to be flagged and to have their visas denied when they attempt to re-enter the U.S., Gasperini warned.

DIVIDE AND CONQUER?

One grave concern for Gasperini is that many small employers may not be aware of aggregation rules that will kick them over the 50- or 100-full-time employee threshold. Some small business owners, particularly with multiple restaurants or other franchises, have been under the mistaken belief they can dodge the employer mandate. Some in agriculture have discussed copying that model. Don't try it.

In coming up with the headcount based on 2014 employee histories, IRS will aggregate employees from business entities with related-party owners. For example, many farm operators may need to include employee headcounts from their trucking business, farm operation, grain elevators, sow co-ops or cotton gins--if they or bloodline relatives own at least 50% of such operations.

"Aggregation rules are very complex and many local CPAs or advisers don't have expertise in this area," Gasperini said. "I'm really really worried that employers acting in good faith upon the advice of their tax consultants will find themselves at odds with IRS when they're audited two or three years down the road. This is a really murky area."

For links to the final IRS regulations (which will be published in the Federal Register Feb. 12), fact sheets and Q+As on the employer mandate, go to http://www.irs.gov/…

For more details on the penalties associated with fringe benefits like medical reimbursement plans and cafeteria plans, watch a one-hour prerecorded webinar with CliftonLarsonAllen CPA Andy Biebl, "Health Insurance Post-Obamacare: What's a Small Employer to Do Now?" Cost of $45 includes handouts. Register at http://www.dtn.com/…

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